Beginning in May the majority of Americans will be receiving their tax rebate check in the mail. This is the governments idea of stimulating the economy. I just wonder if this will work.
I wonder if most people will use this to pay off debt instead of buying.
What do you think? What would you do?
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Comments: 9
My proposal is much simpler :
I think if the federal government in conjunction with state governments were to forego collection of taxes on items MADE in America, people would gravitate towards purchasing good produced here in america for the tax savings and that in turn would boost the economy by promoting business for American companies that hire american workers.
People would begin seeking out these products for the savings and that in turn would create more employment for the american worker.
The problem is, it addresses the symptom (decline in consumer spending) without addressing the causes (rampant gas price inflation, a weak dollar that makes imported goods more expensive, an overextended credit market and a housing sector still searching for a bottom to hit.)
Giving people a one-time gift of $600 each is not going to translate immediately into a healthier economy. Some people will go out and spend it the way the administration intends; others will use it for bills they couldn't otherwise pay; some more will pay down existing debt, and others will save it. However you analyze it, the net effect (in spending) will not be the full value of the checks being sent out.
The administration would be far better off looking at ways to stabilize the mortgage and credit markets, so that people have confidence that their banks are not going belly-up and they can pay their existing debt at reasonable rates. That's the kind of action that isn't sexy and immediate like a rebate, but makes a lot more economic sense in the long run.